Margin Loan case study
Margin Loan case study
A Leveraged Equities Margin Loan allows you to borrow money in addition to your own funds, to invest in a wide variety of acceptable investments. These include shares, exchange traded funds (ETFs), listed investment companies and managed funds. They are mortgaged to the lender as security for the loan and the amount you owe.
With a Leveraged Equities Margin Loan, you can borrow to build an investment portfolio or leverage an existing portfolio. This then boosts your investment capacity. Borrowing to acquire an asset is called gearing or leverage. Investors use gearing when they expect the return on their investments to be larger than the cost of borrowing. However, if the return on your investment is less than your borrowing costs, you will incur a lower return or larger loss than if you had not borrowed or invested at all.
A Leveraged Equities Margin Loan may be suitable if you:
- Want to increase your investment capacity.
- Believe that borrowing to acquire and build your investment portfolio over the medium-long term aligns with your financial goals and risk appetite.
- Require flexible features to manage your investment strategy.
What are the potential benefits?
Increase the amount you already have available to invest.
Diversify an existing investment portfolio without selling.
You may be entitled to claim an income tax deduction for some or all of your borrowing costs depending on your individual circumstances.*
What are the potential risks?
Gearing can magnify gains as well as losses.
It is possible that the performance of your investments may change. This could result in you earning a lower return or incurring a larger loss than if you had not borrowed to invest.
Circumstances can arise which may result in you being required to repay some or all of your loan at short notice. To do this you may be required to pay an additional amount into your Loan Account. You may be required to sell some, or all of the mortgaged investment portfolio at short notice.
Flexibility
A Leveraged Equities Margin Loan has a number of flexible features, which include:
- A range of interest rate options, terms and payment methods.
- Connectivity with most major online platforms and selected brokers.
- Borrowers can be individuals, companies or a trustee on behalf of a trust (except self-managed superannuation funds).
- Add on features that may complement your investment strategy.
- Access to your statements and Loan Account through Leveraged Online.
- Online application process.
Case Study
Borrowing to Invest:
In this example, Share A and Managed Fund B make up the secured portfolio.
Components of the Leveraged Equities Margin Loan
| Share A | Managed Fund B | Total | |
|---|---|---|---|
| Market Value |
$10,000 |
$50,000 |
$60,000 |
| Lending Ratio | 50% | 70% | |
|
Security Value |
$5,000 | $35,000 | $40,000 |
| Funds you contribute | $5,000 | $15,000 | $20,000 |
Comparing investing with and without borrowing
| With a Margin Loan | Without a Margin Loan | |
|---|---|---|
| Your funds | $20,000 | $20,000 |
| Loan | $40,000 | $0 |
| Total Market Value of the Acceptable Investments | $60,000 | $20,000 |
| Positive impact: price increases | ||
| Market Value of acceptable Investments after 10% assumed increase | $66,000 | $22,000 |
| Your remaining capital after loan repayment | $26,000 | $22,000 |
| Gain as percentage of funds you invested | 30% | 10% |
| Negative impact: price decreases | ||
| Market Value of Acceptable Investment after 10% assumes decrease | $54,000 | $18,000 |
| Your remaining capital after loan repayment | $14,000 | $18,000 |
| Loss as percentage of funds you invested | (30%) | (10%) |
With a Margin loan: a 10% change in the market had a 30% positive or negative impact on your portfolio.
Without a Margin loan: a 10% change in the market had a 10% positive or negative impact on your portfolio.
About Leveraged
Established in 1991, we’re proud to be a margin lending specialist in Australia, and a wholly-owned subsidiary of Bendigo and Adelaide Bank.
We offer a choice of multiple margin loan solutions and additional features, a diverse and frequently reviewed investment list and we connect with most major online platforms and selected brokers.
More information
We can help you get started today, complete our enquiry form or call 1300 307 807 to speak to one of our customer service consultants.
Things you should know
The Leveraged Equities Margin Loan is issued by Leveraged Equities Limited (ABN 26 051 629 282 AFSL 360118) as Lender and as a subsidiary of Bendigo and Adelaide Bank Limited (ABN 11 068 049 178 AFSL 237879). This information is correct as of 01 August 2025. This information contains general advice only and doesn’t take into account your personal objectives, financial situation or needs. This information must not be relied upon as a substitute for financial planning, legal, tax or other professional advice. Please consider your personal circumstances, consult a professional investment adviser and read the Product Disclosure Statement and Incorporated Statements (together, the 'PDS') and Product Guide, together with the terms and conditions applying to the product or service, available to download from www.leveraged.com.au before making an investment decision. Terms, conditions, fees, charges and normal lending criteria apply. The examples are for illustration purposes only and do not indicate any view of, or expectation about, the Margin Loan or any investment or transaction. They do not cover all the possible outcomes and are not intended as a recommendation, are simplified and may not reflect actual outcomes, market prices or movements or taxation treatment. Not available for a self-managed superannuation fund.
